Today in the Autumn Budget, the Chancellor announced the government will lift the two child benefit cap, with campaign group Generation Rent welcoming the end of this “cruel and arbitrary policy.”
Over 30% of children in Britain are living in relative poverty after housing costs, while, for private renting households, this number jumps to between 45% and 50% according to the IFS. According to the Child Poverty Action Group, removing the two-child benefit cap will lift around 350,000 children out of poverty.
However, despite campaigning from housing organisations, the Chancellor did not unfreeze the Local Housing Allowance rate which calculates the amount of Housing Benefit tenants can receive.
Just 2.5% of private rented homes are affordable for people claiming housing benefit. Meanwhile, according to IPPR, there are now an estimated 440,000 households with children whose housing support no longer covers the costs of their rent. Maintaining the freeze is expected to add another 90,000 families to this figure by March 2026.
In her speech, the Chancellor also announced increases in the tax rates on dividends, property and savings income by 2 percentage points, which will raise £2.1bn, using the example of private landlords paying less tax on their income than their tenants. Alongside this, she announced a new high value council tax surcharge, targeting properties worth over £2m.
Ben Twomey, Chief Executive of Generation Rent, said:
“The two-child benefit cap and frozen housing benefit rate have pulled hundreds of thousands of families into poverty. Ending this cruel and arbitrary policy is the right thing to do, giving families across the country some breathing space. But the continuing freeze of housing benefit means many renters will still be forced into making heartbreaking choices between heating and eating in order to pay their rent.
“We also welcome measures to make sure private landlords pay a fairer share of taxes. For too long the tax system has been rigged against renters. Increasing property income tax, alongside increased council tax for higher value homes, will mean those with the broadest shoulders start to pay their fair share.”
